Prescription Drug Coverage

The letter D for drug is the quick way to remember what Part D is for. The prescription drug part of Medicare is used by 45 million Americans, and once you’ve enrolled in Original Medicare, you need to sign up for Part D to get access to the private insurance companies that offer prescription drug plans. As of 2023, 90% of Medicare Advantage plans offer prescription drug coverage, but if your Part C plan doesn’t, you can also buy a separate drug plan while under Part C.

If you’re covered by Medicare Parts A and B (Original Medicare) and have no plans to switch to a Medicare Advantage plan, it’s key that you enroll in a stand-alone plan so that you won’t be charged a late enrollment penalty. Note that if you have creditable coverage or are receiving Extra Help, this penalty won’t apply. Also, remember that many Medicare Advantage plans will include prescription drug coverage in your policy, but some do not.

How Do I Enroll?

Just like original Medicare, you need to sign up for Part D during the Initial Enrollment Period (IEP). This is the 7-month time beginning 3 months before your 65th birthday, including your birthday month, and ending 3 months after you turn 65.

After you’ve enrolled, you get a chance to review the prescription drug plans (PDPs) between October 15th and December 7th, or switch into a new plan if you’re not new to Part D.

Your drug coverage takes effect January 1.

To get the PDP you want, either:

When you join a Medicare drug plan, you’ll give your Medicare Number and the date your Part A and/or Part B coverage started. This information is on your Medicare card.

You can expect to wait about 5 weeks for your Part D membership card to arrive. If you need prescription medications during the wait period, most pharmacies will accept the acknowledgement letter from Medicare, or simply an enrollment confirmation number.

Costs

Premiums of the top 10 Part D plans with the largest enrollment averaged between $28/month to $76/month in 2023. Higher premiums apply to higher incomes, starting at $97,000 for a single person or $194,000 for a married couple. You also have a copay and coinsurance for your part of the costs.

The only other cost is your annual deductible. This is what you cover for your prescriptions before your Part D plan takes care of its share of your Medicare-approved prescription drugs. Deductibles range across a variety of plans, but for 2023 the maximum any plan can charge annually is $505.

Good-bye Donut Hole

Most Medicare plans have a gap in coverage that happens when you and your plan hit a certain amount for covered drugs before the end of the coverage period. This is the famous “donut hole,” and thanks to the Affordable Care Act, it closed in late 2019.

In 2023, once your prescription drug costs reach $4,660, you fall into the coverage gap until you reach a $7,400 out-of-pocket limit — this is when so-called “catastrophic coverage” automatically kicks in. Be aware that these figures reflect the retail cost of the drugs, not what you paid toward them. In fact, your part of the $4,660 may be only $1,000 out-of-pocket. Your brand-name drugs will be covered at 75% in 2023.

Is This the Right Plan for Me?

Aside from a cost that’s comfortable for you, there are a few other important details you want to nail down before making your choice:

The Plan’s Formulary

A formulary is simply the list of prescription drugs covered under the plan, and each Medicare Prescription Drug Plan has its own one. If you can’t find the medication or medications you need on a plan’s formulary, we suggest you talk with your physician about alternative medications.

The Plan’s Network

It’s fairly standard for a plan to come with an “in-network” list of approved pharmacies. These are selected on the basis of lowest prescription drug prices. The risk you take going out of network is that you may end up paying more for your medications.

The Mail Order Option

There are plans which offer you better prices for drugs you get via mail order pharmacies. Since your plan may require a three-month minimum per order, it may be smart to ask your doctor if the mail order option makes sense given the medications you need.

The Detail on Covered Drugs

Part D plans generally sort prescription drugs by tier, and each tier has a different cost. The rule of thumb is, the lower the tier, the lower the drug cost; and the higher the tier, the higher the drug cost.

It’s possible for your plan’s formulary to change during the year. Your plan is required to give you two options should your list of medications be affected by this change:

Here’s a breakdown of the different tiers and associated costs. Remember that you should inquire about how your plan structures its tiers since each plan has its own tier system.

Tier 1

Lower co-payment, offering most generic prescription drugs.

Tier 2

Medium co-payment, offering preferred brand-name prescription drugs.

Tier 3

Higher co-payment, offering non-preferred brand name prescription drugs.

Specialty Tier

Highest co-payment or co-insurance, offering specialized, high-cost prescription drugs.

Although Part D drug plans are entitled to provide their own formularies from the comprehensive list of covered prescription medications, they are barred from creating formularies which exclude specific drugs in order to discriminate against certain enrollees.

Should your plan not have a drug that you require, it’s in your rights to ask for a written explanation, and request an exception.

Formularies have to include at least two prescription drugs in each category, covering the bulk of medications in the six protected classes of prescription drugs:

Additionally, all available vaccines have to be covered by Part D when they are needed to prevent illness, except for vaccines covered under Medicare Part B.

For more detailed information regarding Medicare Part D visit medicare.gov.

Still confused? Call us!

We’re here at 833-245-0614 to answer any questions, and ready to help with any issues you might have with an insurer through the enrollment process.